With the recent drop in phone sales Apple looks to new formats to increase revenue and visibility. The Wall Street Journal reports that Apple has been in talks with Hollywood producers to buy rights to new shows, content that may be available as soon as late 2017.
So far Apple is just dipping its toes in the water with a “handful of carefully selected shows,” reports The Wall Street Journal, but it would be easy to imagine the company expanding its original offerings if this first round is a success. Netflix, for example, tested the waters with shows like House of Cards in 2013, and now has more than 50 original shows coming 2017. And according to Netflix CFO David Wells the company hopes to eventually offer 50% original content.
With Apple Music having just 20 million subscribers, which is far fewer than Spotify’s 40 million, this introduction of original video content could attract additional customers willing to pay the $9.99 monthly subscription fee.
This push for original content comes shortly after the volume of iPhone sales decreased in 2016 for the first time since its introduction in 2007. In Fact, Apple CEO Tim Cook took a pay reduction after the company experienced its first revenue decline in 15 years.
In the category, other music streaming businesses including Spotify, YouTube, and Tidal have shifted into original video production as well. The effort comes as a signal of a broken revenue model given the significant overhead faced by these platforms to adhere to music labels licensing requirements and payouts. Video, on the other hand, offers a higher margin for both subscription and ad-based models.